South African striker Siphiwe Tshabalala got the World Cup off
to a rollicking start on June 11 when he scored in the 55th minute of the
tournament’s opening game between the host country and Mexico. His goal sent
the Johannesburg crowd into a frenzy, vuvuzelas buzzing ever louder.

Roughly
8,000 miles away at ESPN’s Bristol, Conn., headquarters, where the company was debuting
its new, dedicated 3-D TV channel, the replay of Tshabalala’s beautiful
crossing goal produced an audible gasp among those watching the game in the
enhanced format. Thanks to a 3-D camera positioned just behind the goal, the
ball looked as if it was leaping out of the screen and directly toward the
viewers as it rocketed into the net.

Things jumping out at viewers is a long-standing element of
3-D, sometimes devolving to cheap gimmickry. But the Tshabalala replay —
occurring just moments after the live event itself — also contained depth,
immersive realism, a perfectly located camera, and the importance of the first
goal scored in one of the planet’s most revered sporting events.

“That’s the wow factor,” said Chuck Pagano, ESPN executive
vice president of technology. “I have to admit I didn’t get it at first, when I
first saw a 3-D demonstration roughly four years ago. But then I saw the wow
factor later on, and now there’s a [3-D] tsunami coming.”

Indeed, a 3-D TV tsunami is crashing through the sports and
entertainment landscape. Fresh off a historic spate of 3-D TV-related
announcements at January’s International Consumer Electronics Show, nearly
every major manufacturer, programmer, distributor and sports property in the
business is now actively engaged in some type of 3-D TV project, ranging from
full-time dedicated channels to special events such as the upcoming MLB
All-Star Game.

Nearly all of them involve delivery of the enhanced format to
the home, where many believe awaits an even greater economic prize than the
more than $1 billion-per-year business for theater-based releases of Hollywood
films in 3-D. In the case of sports, 3-D TV typically involves live game
productions, still the critical core of the sports business.

But moving 3-D TV from “wow factor” to a truly viable,
scalable business is already proving far easier said than done.

Actor and South Africa native Sharlto Copley was
among those who watched the first game of the
2010
World Cup as ESPN demonstrated its
3-D broadcast.

ESPN’s 3-D channel is available in more than 45 million homes
thanks to distribution deals with Comcast, DirecTV and AT&T’s U-Verse, but
is actually being seen in a tiny fraction of that number because of the limited
numbers of 3-D sets currently in homes. Other 3-D programming and distribution
efforts, such as DirecTV’s new four-channel 3-D tier, face a similar issue with
regard to reach.

3-D-enabled televisions began showing up at major retailers
such as Best Buy this spring, and while anecdotal evidence suggests that early
sales have been good and future projections are bullish, it will still be years
before sales of 3-D TVs reach truly critical mass.

On the TV production side,
developing a live game in 3-D currently involves an entirely separate technical
crew than the ones working in the regular 2-D format. That additional expense
in manpower and technology for dual productions is unsustainable long term,
many industry executives say, mandating the arrival of a blended production system
that does not yet exist.

6.2 million

Number of 3-D televisions projected to be sold worldwide this year, representing 3 percent of the sales market

83 million

Number of 3-D televisions projected to be sold worldwide in 2014, representing 31 percent of the sales market

Source: Displaybank

And there’s the broader, more fundamental question: Is 3-D TV
something consumers will truly embrace, and more directly to the point, pay
for?

High-definition TV, after a
slow start early last decade, is now an indispensable element of the business.
But even those directly involved in 3-D are not yet fully certain whether that
dynamic will be fully repeated for 3-D TV, and even if so, how quickly.

“We’re all sort of throwing spaghetti against the wall,”
Pagano acknowledged. “But we’re committed to this going forward. It’s new
territory for everybody, but terribly exciting.”

Chasing the carrot

To understand the financial motivation for the onslaught of
3-D TV efforts, look only at the last 18 months in Hollywood. In 2009, 3-D films
represented 11 percent of the $10.6 billion overall cinema business in the U.S.
and Canada, according to the Motion Picture Association of America, a massive
jump from just 2 percent in 2008.

Developing a live game in 3-D requires an
entirely separate technical crew.

That percentage is poised to surge much higher again this
year, particularly as James Cameron’s 3-D epic “Avatar” has become the
highest-grossing movie of all time. And for films released simultaneously in
3-D and 2-D, 3-D tickets now typically outsell 2-D by more than a 3-to-1
margin, despite the 3-D tickets typically costing more.

Live TV sports, of course, cannot generate those
direct-from-consumer returns given how the economics of sports television work.
But the hope all the same is for higher fan engagement and ratings, which would
then translate into larger rights fees and advertising rates.

“Any time you are able to improve the engagement of your
product, it becomes a more valuable product and your business gets stronger,”
said Dan Ronayne, MSG Networks’ executive vice president and general manager.
MSG in March showed a live New York Rangers-New York Islanders hockey game in
3-D to strong reviews and is pursuing more such productions. “That’s what we
are always focused on. Ultimately, that’s what the promise of 3-D will or won’t
be.”

Expecting no rush to 3-D

The following are results of the Turnkey Sports Poll taken in May. The survey covered more than 1,100 senior-level sports industry executives spanning professional and college sports.

Electronics makers began selling 3-D televisions to consumers this year. When do you think viewing sporting events in 3-D will be as widespread as watching sports in HD currently is?

2010

0%

2011

1%

2012

17%

2013

12%

2014 or later

51%

Never

15%

No response/Not sure

5%

What is the biggest obstacle for the at-home 3-D TV viewing experience to becoming widespread/common in the next two to three years?

TV manufacturers, similarly, are looking to hasten a
replacement cycle, despite the fact that more than 40 million HD sets were sold
between 2007 and 2009, according to Forrester Research. But unlike the early
days of HDTV, when some sets cost roughly the same as a new car, 3-D TVs now on
the market or soon to arrive don’t carry huge upcharges for the enhanced
technology. Best Buy, for example, recently was selling a 50-inch Samsung
plasma 3-D set for $1,800, certainly higher than the $1,069 listed for a
similar set without 3-D capabilities, but nowhere near the tripling or
quadrupling in price many feared less than a year ago.

Because of that relative lack of price escalation, research
firm Displaybank recently projected that 6.2 million 3-D TVs will be sold this
year worldwide, amounting to 3 percent of the sales market, quickly soaring to
83 million units globally and 31 percent of the overall TV market by 2014.
Individual manufacturers such as Samsung, Sony and LG are all expecting strong
returns beginning this year on 3-D TV sales.

3-D additionally is being eyed to provide a big new spark to
flagging DVD sales. Blu-ray DVD players with 3-D capability are beginning to
hit the market, again with fairly affordable pricing often below $300. On top
of the expected blitz of Hollywood features in 3-D for the home, led by
“Avatar,” several sports properties are seeking to develop 3-D highlight DVDs.

“I definitely see a market for us in DVD for this,” said Steve
Hellmuth, NBA Entertainment executive vice president for operations and
technology. The league, perhaps the most active historically among major U.S.
properties in 3-D activity, is developing a 3-D DVD retrospective of February’s
record-setting All-Star Game in Dallas, along with highlights of other NBA
events produced in 3-D. No release date has been set. “It’s something that can
give us extra legs on this, and encourage more sampling of 3-D, which is going
to be very important as this continues to develop.”

And on a longer-term perspective, selling larger sets of
broadcast rights to 3-D broadcasts also is being eyed closely.

Comcast partnered with the Augusta National
Golf Club to produce this year’s Masters in 3-D.

“This is something where we’d obviously be working on in close
partnership with our [existing] TV partners,” Hellmuth said. The league has set
no 3-D plans yet for the 2010-11 season. “Not only is there opportunity here,
but perhaps even more so overseas where we can use 3-D to re-create more of
that feeling of the in-arena experience.”

Major sports events, where maximum buzz can be generated, will
be among the first to get snapped up. Comcast partnered this year with the
Augusta National Golf Club to produce the Masters in 3-D.

“What’s been missing with 3-D for the past several years was
the set and a sufficient amount of content to play on the set,” said Matt
Strauss, Comcast senior vice president of new media. “Doing additional
tent-pole events like the Masters is something that presents a lot of value,
and producing select tent-pole events is something that we’re looking at very
carefully.”

Clearing the hurdles

For all the allure and promise of 3-D TV, however, there are
still many major hurdles that must be addressed for the technology to grow
fully and prosper. Foremost among them, predictably, are the glasses.

Every 3-D TV requires either passive or active-shutter glasses
to create the 3-D effect, and those darkened glasses can inhibit the social
nature of watching sports. Active-shutter glasses, typically much more
expensive but also more frequently used for TVs targeted for home use, use
motorized lenses to shutter the views at high speed. Passive glasses typically
employ polarization filtering techniques, and are akin to what viewers get at
3-D cinemas.

What the nets have planned

ESPN 3D

The country’s first stand-alone 3-D channel launched June 11 with the World Cup. ESPN 3D has close to 100 live sporting events planned for its first year, including NBA games and the X Games. The channel goes dark when it’s not showing a 3-D telecast.

Fox

The network is testing 3-D next month with its MLB All-Star Game, which Fox is co-producing with DirecTV. The broadcaster hasn’t announced any other 3-D telecasts on its schedule.

YES Network

The New York-based regional sports network will be the first to telecast an MLB game in 3-D when it co-produces two New York Yankees-Seattle Mariners games with DirecTV just before the All-Star break, July 10 and 11. The RSN does not have any other 3-D telecasts on its schedule.

MSG Network

The Cablevision-owned RSN won raves for its initial 3-D telecast, a March 24 NHL game with the New York Islanders and New York Rangers. MSG does not have any other 3-D telecasts on its schedule, but is planning to produce more events using the technology.

Discovery

Next year, the documentary channel is launching its own 3-D network, a 24/7 service that will be a joint venture with Discovery, Sony and IMAX. Earlier this month, it named longtime Discovery executive Tom Cosgrove as the channel’s president and general manager.

— John Ourand

U.K. broadcaster BSkyB has
garnered some decent early returns on a test effort to bring 3-D TV into
roughly 1,000 pubs there, using inexpensive passive glasses. Anecdotal evidence
there has pointed to strong consumer acceptance in that communal setting, and
important for the pubs, sizable increases in food and beverage purchases.

But in the home, more challenges exist. 3-D TV sets typically
come with only one or two sets of glasses, and sometimes none at all. Buying
more to accommodate bigger groups requires incremental expense, with prices
well in excess of $100 each for active-shutter models. And even if a friend
brings over his 3-D glasses to a viewing party, they almost certainly will not
work, because there’s no universal set of 3-D glasses compatible with every set
on the market.

More fundamentally, the
3-D glasses conflict with the multitasking that now exists in concert with
watching TV. Nielsen Co. earlier this year said that 59 percent of U.S.
consumers watch TV and surf the Internet simultaneously, with both that
percentage and the amount of time spent performing those tasks together continuing
to rise.

“You can’t cook or read or
text, be on Facebook, or whatever while you’re watching 3-D. That’s why for the
near-term future, we see this as more of a big-event thing and something we’re
really delivering a differentiated experience compared to watching a great HD
presentation in 2-D,” Hellmuth said.

TV manufacturers, technologists and others are working
actively on 3-D technology that does not require the glasses. But there is no
timetable on when that will become available, much less reach mass adoption.

What’s it cost?

A scan of Best Buy earlier this month gives consumers a good idea of what they can expect if in the market for a 3-D television. Here’s a sampling of prices:

Samsung

55-inch

$3,149.99

LG

55-inch

$3,299.99

Sony Bravia

46-inch

$2,699.99

Panasonic Viera

50-inch

$2,599.98

You may also need:

3-D glasses designed to work with the television, which may or may not be included with your television purchase

A 3-D-ready Blu-ray player to watch 3-D Blu-ray discs

Source: Best Buy

For 3-D TV shoppers, the
in-store experience is similarly challenged. With the technology still so new,
there are no definitive benchmarks on what consumers need, should have or
should expect to spend. Package deals, though often attractively grouping a 3-D
TV set, 3-D-enabled Blu-ray player and home theater system, only muddy the
waters further. And employee training among many retailers appears to be
lacking.

“The level of misinformation out there is really, really
severe,” said Steve Schklair, founder and chief executive of 3Ality Digital
Systems, a California-based technology provider that has aided the NFL, BSkyB
and many others on their 3-D efforts. “I’ve been told all sorts of wacky things
[by salespeople] in the stores. There’s no real consumer education happening
out there.”

Programmers additionally
are looking for financial help on building out an infrastructure to support
future 3-D productions. That, of course, leads in part to the traditional dance
between programmers and distributors over carriage fees. But again, with no
concrete sales data, ratings or definitive consumer behavior for 3-D to guide
negotiations, those discussions remain hamstrung to a degree.

“The road map has already been paved,” said Ray Hopkins, YES
Network chief operating officer. The regional sports network, along with
DirecTV, will produce the first baseball game shown in 3-D next month with a
pair of New York Yankees-Seattle Mariners games that will serve as a run-up to
the MLB All-Star Game production. “Given how expensive it is to produce sports
in 3-D, networks need to be compensated in order to share costs, in a similar
manner they were compensated for HD.”

When ESPN launched its 3-D network June 11, it followed a
short promo announcing the new network with four advertisements, all shot in
3-D.

The first was a minute-long spot from Sony marketing its 3-D
television sets. Next came an ad from Gillette, followed by one for “Toy Story
3,” then a “This is SportsCenter” spot.

And that was it. Those are the only 3-D spots that have aired
on the network, and no new ones are planned.

If 3-D television still is in its infancy, 3-D advertising is
even younger.

This “SportsCenter” ad is one of four
3-D
spots to air on ESPN’s new
network so far.

Two of the three initial advertisers are companies that are
trying to develop their own 3-D businesses. Movie studios marketing 3-D movies,
like Disney’s “Toy Story 3,” are a natural fit. So, too, are consumer
electronics companies, like Sony, trying to sell 3-D equipment.

In ESPN 3D’s first week in existence, Gillette was the only
company to produce a 3-D spot that is not actually in the 3-D business. It
produced a 3-D ad to help market its Fusion ProGlide razor brand.

“Gillette was intrigued when we talked with them about what we
were doing with 3-D,” said Ed Erhardt, ESPN’s president of customer marketing
and sales. “They felt it was something they could utilize to help launch their
Fusion ProGlide. They liked the idea that it was something that would enhance
the brand.”

But Gillette is one of the few. Some 3-D telecasts are being
produced without any 3-D ads at all. YES Network’s upcoming 3-D game is not
expected to have any ads produced in 3-D. And Fox says none of its All-Star
Game advertisers have expressed interest in delivering 3-D ads.

To some executives, it feels like the early days of HDTV, when
most of the ads during HD telecasts were shot in standard definition.

For networks looking to produce 3-D telecasts, the lack of
added ad sales revenue makes it more important to partner with distributors to
help defray the production costs.

Right now, it’s too early to tell what — if any — premium
networks can place on 3-D ads. 3-D ads are much more expensive to produce. And
both networks and advertisers will be studying research from how many viewers
are watching the early 3-D games and who they are.

“It’s too early to tell. Much too early,” Erhardt said.
“Certain categories, like movies, consumer electronics and autos, will
certainly feel that 3-D enhances their product. I’m not sure quick-service
restaurants have to have a 3-D commercial, unless there’s something going on in
their commercial that helps them sell a product that they couldn’t do in HD.”

When I was at ESPN’s
headquarters earlier this month for the World Cup start and ESPN 3D channel
debut, a fairly ridiculous scene emerged. Writing on my laptop during that
South Africa-Mexico opening match, I was alternating frequently between
using the 3-D glasses to watch the game,
fully engrossed in the action, and resting them on top of my head to continue
writing.

At one point, with the 3-D
glasses perched on my head, pen dangling out of my mouth, and thumbing through
my notes, an ESPN PR rep walked by and chuckled at my ham-fisted attempt to
bridge the worlds of 3-D absorption and ordinary work. There wasn’t much I
could say in response. It was a scene I had repeated more than a dozen other
times over the past three years at various 3-D TV exhibitions.

3-D TV is really best
thought of like going to the movies. At the cinema, the room is dark, there’s
not much talking and there are requests to shut off mobile devices. The best
3-D TV experiences I’ve had have come when I’ve resisted all urges to do other
things as well, and simply watched.

Fisher

That, of course, runs counter
to the social nature of sports fandom; the traditional in-home sports TV
experience; and the heavy multitasking that now happens in concert with TV. But
until 3-D develops to the point — glasses or no glasses — where people can
easily drift back and forth to and from the action, there is going to be
impairment in its growth.

When taken as an all-in
experience, however, 3-D TV has advanced considerably in the last couple of
years. Gone are most of the image ghosting and headache-inducing camera shifts.
Effective viewing angles have widened so that one need not be locked in
strictly in front of the middle of the screen. And TV directors are learning
how to incorporate more of the close, low shots that produce more of the full
3-D effect into live game broadcasts.

That shift in directorial
thinking — also forced in part by an inability to supplant camera positions
established for primary 2-D productions — has created a situation where some
sports naturally translate much better than others to 3-D.

3-D glasses are a problem for viewers
trying to multitask.

Soccer and golf are
particularly well-suited, with lots of open, green space and the ability to get
cameras very close to the action. Basketball also does reasonably well in 3-D.
Hockey has the challenge of the posts that support the glass around the ice,
which can obstruct full 3-D views. But there is potential in that sport, too.

America’s two most popular
spectator sports, baseball and football, face perhaps the greatest challenges
in 3-D. Each sport has been shot for TV in pretty much the same way for
decades, with the high-home and center-field cameras in baseball, and the main
high sideline cameras in football representing the primary views.

Shifting away to other,
less traditional camera locations for 3-D creates some cognitive dissonance
when watching those two sports presented extensively from other angles. How
baseball and football get around that will speak volumes on the advancement of
3-D in sports.